The Personal Loan Glossary, A–Z

How to Use This Glossary

Every personal loan term below is defined in two to four plain sentences with a permanent anchor link, so guides across this site — and your own notes — can point at a definition that stays put.

Fidelity Funding's selection principle is practical: these 43 terms are the vocabulary of an actual loan agreement and the guides that explain one. Each definition is written to stand alone — read it at the moment a document confuses you, and the document should stop confusing you.

Personal loan anchors follow the pattern glossary.html#apr, and every entry keeps its anchor permanently. Suggest missing terms through the contact page; the list grows when agreements do.

Terms A–Z

Forty-three personal loan terms run alphabetically from ACH Transfer to Underwriting, each with a stable anchor and a definition built to survive out of context.

ACH Transfer

The electronic bank-to-bank system that delivers loan funds and collects payments. Standard ACH posts the next business day; weekends and federal holidays pause it.

Adverse Action Notice

The written explanation a lender must send when it declines an application, naming the principal reasons. Read it as a to-do list — it states exactly what to fix before the next request.

Amortization

The schedule that splits each fixed payment between interest and principal. Early payments are interest-heavy; later ones are principal-heavy, which is why extra payments made early save the most.

Annual Fee

A yearly charge common on credit cards and rare on personal loans — one structural reason a fixed loan can undercut a card on total cost.

APR (Annual Percentage Rate)

The annualized cost of a loan including interest and mandatory fees, standardized by federal law so offers can be compared on one number. When two offers disagree with your instincts, the APR line settles it.

Autopay

Automatic payment drafting from your checking account each due date. Many lenders discount the rate slightly for enrolling, and it eliminates the late-payment risk entirely.

Balance Transfer

Moving credit card debt onto another card, usually under a promotional 0% APR with a 3%–5% transfer fee. Compared against consolidation loans in our head-to-head guide.

Borrower

The person who signs the loan agreement and owes repayment. On this site, always you — Fidelity Funding is never party to the loan itself.

Collections

The process after serious delinquency where a debt is pursued by the lender or sold to a collection agency, with significant credit-report consequences. Medical debts have special, more protective reporting rules.

Co-signer

A second person who guarantees repayment. Uncommon at the $500–$5,000 tier, where income-first underwriting usually lets borrowers qualify alone.

Credit Bureau

One of the three national companies — Equifax, Experian, TransUnion — that compile credit reports. Most installment lenders report payments to at least one monthly.

Credit Mix

The variety of account types on a credit file. Adding an installment loan to a cards-only file improves mix, a modest but real scoring factor.

Credit Report

Your bureau-compiled history of accounts, balances, and payments. Free weekly copies are available from the official federal source; disputing errors is free and often fast.

Credit Score

A number, commonly FICO 300–850, summarizing credit risk from your report. Lenders band it: 580–669 fair, 670–739 good, 740+ very good and up.

Credit Utilization

Revolving balances divided by revolving limits. Keeping it under 30% — ideally under 10% — is the fastest controllable score lever, and installment loans don't count against it.

Debt Consolidation

Replacing several debts with one loan, one payment, and one payoff date. Reorganization, not reduction — the full mechanics live in our consolidation guide.

Debt-to-Income Ratio (DTI)

Monthly debt payments divided by gross monthly income. Lenders compute it with the prospective loan included; under roughly 40–45% is comfortable territory at this tier.

Default

The formal failure state after extended non-payment, triggering collections, credit damage, and possible legal action. Everything on this site about sizing payments exists to keep borrowers far from it.

Deferred Interest

A promotion — common in retail and medical financing — where interest accrues silently and is charged retroactively on the original balance if any amount survives the promotional window. Fixed-rate loans have no equivalent cliff.

Delinquency

A payment past due. Thirty-plus days late is typically reported to bureaus; contacting the lender before the due date usually opens grace options.

Disbursement

The lender's release of approved funds, normally by ACH to your checking account. Some lenders offer same-day debit-rail disbursement for a fee.

E-Signature

The legally binding electronic signing of your loan agreement — the one moment in the process that creates an obligation.

Finance Charge

The total dollar cost of credit — all interest plus mandatory fees over the loan's life — stated in the Truth in Lending box on every agreement.

Fixed Rate

An interest rate locked for the life of the loan, producing an unchanging payment. Nearly universal in the $500–$5,000 personal loan market, and the structural advantage over variable-rate cards.

Grace Period

A short window after the due date before a late fee or reporting applies. Terms vary by lender and state; the agreement states yours.

Hard Inquiry

A credit check tied to an actual application, visible to other lenders and capable of trimming a few score points for up to a year. In this network it happens once, at the lender you choose.

Installment Loan

Credit repaid in a fixed number of equal payments with a set end date — the structure of every personal loan on this site, and the opposite of revolving credit.

Interest Rate

The base cost of borrowing, before fees. Compare offers on APR instead, which folds mandatory fees into one honest number.

Late Fee

The charge for a missed due date, commonly $15–$40 or a small percentage of the payment (estimates). Autopay makes it a non-event.

Lender Network

The set of independent lenders a connection service like Fidelity Funding routes requests to. One request, many reviewers, offers from whichever lenders want the business.

Loan Agreement

The binding contract stating amount, APR, payment, schedule, and fees. The only document that controls — save a copy the day you sign.

Loan Term

The repayment length, typically 3–36 months at this tier. Shorter terms cost less in total; longer terms cost less per month.

Origination Fee

A one-time charge of roughly 1%–8% (estimate) some lenders deduct from or add to the principal. Already reflected in APR, which is why APR comparison catches it automatically.

Payoff Amount

The exact figure, good through a stated date, that retires a loan completely — always slightly different from the current balance because interest accrues daily.

Prepayment Penalty

A fee for paying a loan off early. Rare at reputable personal loan lenders; confirm its absence in the agreement, then overpay freely.

Prequalification

A soft-pull preview of likely terms before a formal application. The entire matching step on this site is prequalification mechanics at network scale.

Principal

The amount borrowed, before interest. Every extra dollar paid reduces it directly — and with it, all future interest.

Proof of Income

Documentation that income recurs: recent pay stubs, benefit award letters, or bank statements showing deposits. The single most decisive document set at this loan tier.

Revolving Credit

Open-ended credit — cards and lines — where the balance floats and minimum payments are designed to persist. The structural contrast with installment loans runs through every comparison on this site.

Routing Number

The nine-digit code identifying your bank for ACH transfers. Copy it from a statement, never from memory — transposed digits are a classic funding delay.

Soft Inquiry

A credit check invisible to other lenders and harmless to your score, used for prequalification and matching. What 'checking your options is free' technically means.

Truth in Lending Disclosure

The federally standardized box on every loan agreement stating APR, finance charge, amount financed, and total of payments — the sixty-second audit that makes any two offers comparable.

Underwriting

The lender's review of your file — credit, income, banking, DTI — that produces an approval, a decline, or modified terms. Income-first underwriting weighs deposits and stability over the score.

Reading a Loan Document with This Page Open

The efficient read of any personal loan agreement uses four glossary stops in order: the Truth in Lending box, the APR line, the fee terms, and the prepayment language.

Open the personal loan agreement beside this page and the audit takes minutes: the TIL box frames the whole cost, APR makes offers comparable, origination and late fee terms name the edge costs, and prepayment language confirms the exit stays open.

That four-stop read is the literacy this glossary exists to enable — the difference between signing a document and signing a document you could explain to someone else.

Why Plain Definitions Matter in Lending

Personal loan vocabulary does gatekeeping work whether anyone intends it or not, and plain definitions are the counterweight: a borrower who knows the words negotiates terms instead of absorbing them.

The pattern shows up in Fidelity Funding's own reviews — borrowers who read the glossary describe their agreements as 'actually readable,' which changes behavior: they ask lenders written questions, they catch drafting errors, they compare on substance. Vocabulary is leverage.

That is also why every Fidelity Funding definition here avoids circularity and jargon-defined-by-jargon. If any entry fails that standard, the contact page is the complaint department, and we mean it.

The Five Term Families

The forty-three personal loan terms organize into five working families — cost terms, process terms, credit-file terms, document terms, and failure-state terms — and knowing the family tells you when each matters.

Cost terms (APR, finance charge, origination fee) matter at comparison time. Process terms (soft inquiry, prequalification, disbursement) matter during the request. Credit-file terms (utilization, mix, bureau) matter before and after — they are the levers the eligibility guide teaches. Document terms (Truth in Lending, loan agreement, payoff amount) matter at signing and closing. Failure-state terms (delinquency, default, collections) matter precisely so they never apply to you.

Read a personal loan's lifecycle — small personal loans included — through the families and the vocabulary stops being a list: each stage of borrowing has its handful of words, and this page keeps all five handfuls one anchor away.

The Numbers Cheat Sheet

A handful of thresholds recur across every personal loan conversation — from fast personal loans timing to debt consolidation loans math — this table collects them so the guides can cite one anchor instead of re-explaining.

Every figure is the estimate the full guides justify — rates for the fee bands, eligibility for the ratios, the speed guide for the clock. The cheat sheet is for the moment mid-document when you just need the number.

How This Glossary Fits the Fidelity Funding Toolkit

Within the Fidelity Funding toolkit the glossary is the layer underneath everything: the guides narrate, the calculator computes, the lender table frames — and this page defines the words all three are made of.

The practical loop: a personal loan guide uses a term once with a glossary link; the agreement uses it in binding print; the anchor here resolves both. Borrowers comparing debt consolidation loans, pricing small personal loans, or reading their first bad credit personal loans offer all land on the same forty-three definitions — which is the consistency that makes the vocabulary learnable at all.

Fidelity Funding treats plain definitions as infrastructure, not content: every personal loan signed on this site's watch should be a document its signer could explain. The glossary is where that standard is enforced, one term at a time, and the FAQ and guides inherit it wholesale.

Keep the Tab Open

The glossary's highest use is ambient: a tab kept open beside any personal loan document, consulted the moment a term resists, closed only when the agreement reads clean end to end.

Vocabulary pages get bookmarked and forgotten; this one earns its keep at signing time, which is exactly when Fidelity Funding most wants a borrower slowed down to reading speed. A personal loan explained in your own words is a personal loan chosen, not absorbed — and forty-three definitions is the entire price of the difference.

When the tab finally closes on a clean read, the next stop is whichever page your situation names: the guides, the calculator, or the request itself.